Cholera toxin (CT) produced by Vibrio cholerae is the causative agent of the disease cholera. CT consists of a B subunit that binds to ganglioside GM1 on the surface of the intestinal mucosal cell and an A subunit that is involved in activation of adenylyl cyclase. The latter process requires that the A subunit be reduced to generate the A1 G protein (Gs) of adenylyl cyclase. This modification blocks the intrinsic GTPase activity of Gs and keeps the cyclase in a persistently activated state. We have been investigating the detailed mechanism of cellular processing and activation of CT. As a model, we are using human enterocytes, the natural target for CT. We are particularly interested in events during the lag period between toxin binding and cyclase activation. We previously have shown that the holotoxin binds to the cell surface with the A subunit facing away from the membrane and that lag period small amounts of A1 peptide are generated by the cells, and the cyclase becomes activated. We now show that CT is reduced by a cellular reductase activity which we have identified as protein disulfide isomerase (PDI). Although PDI is found in the lumen of the endoplasmic reticulum, some is present on the cell surface. Using cell not involved in CT reduction, and thus generation of A1 occurs at an intracellular site. It has been proposed that CT is internalized through microdomains are enriched in cholesterol, glycolipids, caveolae and their function. We observed that filipin treatment blocks the ability of CT to activate adenylyl cyclase and the effect is rapid, which CT enters the cell through caveolae, and undergoes reduction by PDI in an intracellular compartment to generate the A1 peptide.